Airline Biz Blog

Southwest Airlines chairman and CEO Gary Kelly spoke Tuesday to an investment conference held by JP Morgan, and here are some highlights:

• At present, it doesn’t intend to back off its plans to increase capacity by 5 to 6 percent this year, mainly by increased utilization of its fleet rather than increasing the number of aircraft.

• It probably won’t add any more cities beyond Charleston and Greenville-Spartanburg, S.C., launched last Sunday, and Newark, N.J., to be launched this coming Sunday.

“Our new cities this year will probably be limited to what you’ve already seen announced,” he said.

• The service to the two South Carolina cities is “off to a fantastic start. Those cities are underserved and overpriced and very classic destinations for Southwest Airlines. I’m very pleased with that launch.”

• He acknowledged that with the March 1 launch of its new Rapid Rewards program, Southwest “had some opening day technical jitters,” but added: “the system has since very much smoothed out. It’s operating as we planned.”

Southwest has been raked over the social-media coals by program members who didn’t like the changes or, more often, were panicked or outraged by their inability to get accurate information about their accounts. Those complaints continue, as visitors to Facebook can see.

• Southwest has put its work to replace its reservation system technology on the backburner as it concentrates on three more urgent projects.

It is focusing on launching the Rapid Rewards changes, its pending merger and integration with AirTran Airways and the early 2012 arrival of its Boeing 737-800s.

“The fourth initiative on our reservation system replacement, we have temporarily suspended that in lieu of working on these other major initiatives, and in particular until we settle what our AirTran integration work plans will be,” Kelly said.

“But I suspect that we will be back working on our reservation system replacement more fully in several months or at least this year,” he said.

• Southwest Airlines won’t be flying to any international destinations for several years because it needs the new reservations system before it can handle international itineraries.

“The current Southwest legacy technology is all domestic,” Kelly said. “It’s worked very well for 40 years. We need a new system for the next 40 years.”

• Southwest doesn’t plan any quick changes to AirTran’s route system at the outset.

“We have no plans to close any cities. We have no plans to add any cities,” Kelly said.

The focus will be on AirTran’s connecting hub in Atlanta. “We want to get in and work with the AirTran experts, understand it before we start going in and making changes.”

• Southwest is anxious to get a new, more efficient airplane from manufacturers, whether it’s from Boeing, its supplier for the first 40 years, or someone else. Boeing has talked about a new narrow-body aircraft for first deliveries in a decade. “Ten years is long time to wait,” Kelly said.

“What is inevitable is that the next generation aircraft for Southwest Airlines, no matter the source, may very well be a different airplane, whether it’s Boeing, whether it’s Airbus, whether it’s Bombardier,” he said. “So I think at some logical point, we’ll have to deal with that.”

• It doesn’t bother Southwest that, with AirTran’s Boeing 717s coming into the fleet, that Southwest will have more than just Boeing 737s in its fleet.

“From an efficiency perspective, as long as we have a sufficient number of units in that sub fleet, we feel like we can operate very efficiently. We don’t want eight different airplanes, but I think we can handle two or three.”

• Southwest hasn’t an opinion about the idea of having twin-aisle airplanes in its fleet, but it is open to the idea.

“I think we need to advance the discussion with Boeing first and there are at least some theoretical advantages in thinking about a twin-aisle and I think a lot of that may very well depend on the size of the aircraft,” Kelly said.

“But for example, maybe a twin-aisle doesn’t work for a 137-seater, but it does for a 150-seater. We just don’t know enough yet to really have much of an opinion, but I would acknowledge that we are open to those kinds of discussions,” he said.

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Terry Maxon writes about items of interest to travelers and the aviation community.